Nihal Mohammed Kamal Brake v Geoffrey William Guy
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 11 June 2020 |
| Neutral Citation | [2020] EWHC 1484 (Ch) |
| Date | 11 June 2020 |
| Docket Number | Case No: BL-2019-BRS-000028 |
| Court | Chancery Division |
[2020] EWHC 1484 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
BUSINESS LIST (ChD)
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: BL-2019-BRS-000028
Stephen Davies QC (instructed by Seddons Law LLP) for the Claimants
Andrew Sutcliffe QC and William Day (instructed by Stewarts Law LLP) for the Defendants
Hearing dates: 1 June 2020
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
This is my judgment on an application by the defendants by notice dated 25 March 2020, which was originally for an order for security for their costs of this claim. The application was argued before me on 1 June 2020, remotely by means of a Zoom video conference call, curated by a third-party provider. For reasons that I will come on to, arising out of what happened at the hearing and after the hearing, the defendants accept that the application cannot now succeed. But they now say that in the circumstances they are entitled to their costs against the claimants, and on the indemnity basis. The claimants resist this. Essentially, therefore, this judgment is about the costs of the application. Nevertheless, it is unfortunately necessary to set out in some detail not only the background to the matter, but also the course of and the arguments involved in the application.
The claim itself was commenced by claim form issued on 2 September 2019. It alleges that the defendants have “unlawfully appropriated electronic and/or hard copy documents containing private, confidential and/or privileged information and personal data belonging to” the claimants. It seeks relief in respect of such documents and information, including disclosure, inspection of databases, an injunction to restrain use of the documents/information and destruction of copies of such documents/information within the defendants' control. Particulars of claim were originally dated 2 September 2019, and amended on 23 March 2020. A defence was served on 29 May 2020.
On 28 November 2019 Mr John Jarvis QC, sitting as a deputy High Court judge, upon certain undertakings by the claimants, granted an interim injunction restraining the defendants until final determination of the claim or further order from disclosing or publishing certain documents within a certain email account. The judge also ordered by consent that the defendants provide the claimants with a full copy of the account and directed a procedure designed to identify private documents in that account, together with ancillary directions including the preparation by a named expert of a forensic IT report relating to the account. I will come back to the judge's judgment on that occasion later in this judgment.
BACKGROUND
Purchase of West Axnoller Farm
The background to this claim is complex. I summarise it briefly here. In September 2004 the first claimant (“Mrs Brake”) acquired West Axnoller Farm from local landowners the Vickery family (who continued to have substantial landholdings locally). This property included a substantial dwelling-house known subsequently as Axnoller House. Mrs Brake began to operate a holiday letting business at the Farm, subsequently joined in partnership by the second claimant (“Mr Brake”).
‘Stay-in-Style’
In February 2010 the claimants entered into a new partnership with a third person, a limited partnership called Patley Wood Farm LLP (“PWF”), whose principal was Lorraine Brehme (“Mrs Brehme”). The new partnership (known as “Stay in Style”) was to carry on the business of providing luxurious weekend and other breaks, and hosting events such as weddings. The first claimant contributed the Farm as partnership property, although it was charged to Adam & Co to secure borrowings. With funds contributed by Mrs Brehme, in 2010 the partnership acquired West Axnoller Cottage (“the cottage”), a matter of yards away from the main farmhouse at the Farm, but on the other side of the driveway leading to it. At first the cottage was used as accommodation for a housekeeper and then for a personal assistant (Simon Windus) and his family. After they left in 2012 it was used (inter alia) for the claimants to stay in when the main house was let. As I explain below, there is a separate dispute about whether it had become their principal residence by 2015.
Arbitration and bankruptcy
Differences arose between the claimants on the one hand and PWF on the other, which were referred to arbitration. That arbitration had ended on 21 June 2013 with an award in favour of PWF, and the dissolution of the partnership. The claimants in the meantime asserted a claim in the High Court against Mrs Brehme and PWF, initially for damages, but later also for a proprietary estoppel equity relating to the cottage. As yet this claim has not been determined, and so the proprietary estoppel claim remains unvindicated. Following a failure to pay orders made against them for costs in the arbitration, the claimants were adjudicated bankrupt on 12 May 2015. The partnership itself had subsequently gone into administration (in 2016), and then into liquidation (in 2017).
Sale to Sarafina Properties Ltd
There were disputes between the claimants and the relevant insolvency officials about many aspects of the bankruptcies and the liquidation. In addition, in October 2014 Adam & Co, the bank which had lent money to the first claimant against the security of the Farm, appointed receivers who eventually sold it in July 2015 to a newly incorporated company, Sarafina Properties Limited, a corporate vehicle for the Hon Saffron Foster (“Mrs Foster”). Mrs Foster is apparently a daughter of Lord Vestey and a friend of the claimants. Sarafina Properties Limited permitted the claimants to continue to occupy the Farm and to use it for the purposes of a business similar to that of Stay in Style.
Purchase of Sarafina Properties Ltd by the second defendant
In February 2017 Mrs Foster sold the company to the second defendant (“Chedington”), and its name was changed to Axnoller Events Limited, the third defendant (“AEL”). Chedington is an investment vehicle for the first defendant Geoffrey Guy (“Dr Guy”). Mrs Brake was employed by AEL to continue to run the wedding and rental accommodation business as before. There is a dispute as to the position of Mr Brake. Relations broke down however, and on 8 November 2018 notice was given to the claimants of termination of their contracts of employment. This has led to proceedings in the employment tribunal against AEL and others by each of the claimants (“the Employment Claims”), and proceedings in the High Court by AEL against the claimants to recover possession of the Farm (“the Possession Claim”).
Transactions relating to the cottage
Following this, in January 2019 the claimants' trustee in bankruptcy, Duncan Swift (“Mr Swift”), entered into a transaction with the liquidators of the partnership in relation to the cottage, to acquire the liquidators' rights in it. Chedington entered into back to back transactions with Mr Swift in order to acquire those rights. The Brakes allege that Chedington and Mr Swift acted collusively, implementing “unlawful arrangements to create the false appearance that Chedington had acquired title to the cottage”. Chedington subsequently took possession of the cottage, the Brakes say unlawfully. They therefore commenced eviction proceedings against Chedington (“the Eviction Claim”). So the position on the ground currently is that the claimants are in occupation of the House, but seek possession of the cottage, whereas Chedington is in occupation of the cottage, but seeks possession of the House.
Insolvency proceedings
In addition, on 12 February 2019 the Brakes commenced insolvency proceedings (the “Liquidation Application” and the “Bankruptcy Application”) against both the liquidators of the partnership and their trustee in bankruptcy. The first purpose of these insolvency proceedings was to unwind the disputed transactions. The second purpose was (as against the trustee) to establish that the Brakes' pre-existing interests in the cottage and the two adjacent parcels of land revested in them on 12 May 2018 under the Insolvency Act 1986, section 283A, on the basis that they were the Brakes' sole or principal residence at the date of bankruptcy, and Mr Swift had not sold them three years later. In April 2019, by consent, Chedington was joined as second respondent to the proceedings against Mr Swift, because it claimed to be a successor in title to him. In June 2019 Mr Jarvis QC made an order by consent removing Mr Swift from office, and another appointing his successors. In December 2019 Mr Jarvis QC gave directions for the trial of these insolvency proceedings before me in May this year.
Strike-out applications and trial
In January this year Chedington applied to strike out the proceedings against the liquidators and most of those against Mr Swift and itself, on the basis that the Brakes lacked standing to bring them. I heard those applications in early March 2020, and acceded to them: I struck out the whole of the Liquidation Application, and most of the Bankruptcy Application, for lack of standing (on application, I gave permission to appeal; those appeals are still outstanding, with ‘hear-by’ dates in November 2020)....
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